There's a crypto alternative for everything. As of early 2019, you can tip people cryptocurrency on social networks, use it to pay for groceries, or even use as a way to pay for dental health. It stands to reason, therefore, that there are alternatives to traditional equity trading, some of which have been out for years, and some of which are relatively newer.

BitShares is one such platform – a blockchain platform based on Graphene that allows you to trade cryptocurrencies, fund projects, and a host of other financial services that put it ahead of some of its competitors.

BitShares: The Breakdown

BitShares is like any other distributed ledger in many ways, but it comes with some special extra features. One of the most impressive is its staggering 1.5-second block time on average – which is crazy, compared to Bitcoin's 10 minutes. The system can also handle up to 100,000 transactions a second, far surpassing the transaction speed of almost all competitors.

The system works on a delegated proof-of-stake algorithm, which has several advantages. Not only does PoS encourage more user involvement and investment (more coins to stake, more rewards), but it also levels the playing field by removing the need to buy expensive ASIC rigs for mining.

BitShares makes things a little more clean and user-friendly by having the user's wallet be their username – removing the need for long complicated strings of numbers and letters.

BitShares as a Financial Service

BitShares has a native token, the BTS, but unlike many other native tokens, the BTS has more uses. One thing that BitShares offers is the option to convert BTS into smart coins, or bitAssets. These are tokens that are connected to the value of real-world things like gold, silver, the U.S. dollar, and more. With collateral backing them, they're more stable than other crypto tokens whose value depends on the market.

There are other advantages of the bitAsset. Since each smart coin is backed 200% by the BTS token, it can always been converted back without trouble. You can predict what the price of the token will be in the future by following the movements of the real-world assets it's linked to.

The bitAsset is a great way for investors who are new to the world of cryptocurrency and are uneasy at the volatility that the market can have (as witness the recent rise and fall in January 2019, which affected the whole cryptocurrency market) to get involved, since it offers a convenient hybrid of qualities between traditional investing and crypto investing.

BitShares has another feature that sets it apart: lending. That's right: BitShares can loan your BTS out. This feature works with any and all assets for which information is available, and there's even the capacity for collateralized loans.

The Decentralized Exchange

Why are traditional exchanges more risky, from a security standpoint? The answer is that they're usually centralized, meaning that the same service that maintains the order book of the exchange is the same one that issues the “IOUs” for fiat money and cryptocurrency people trade, as well as redeeming them.

When one centralized entity handles everything, things can go very wrong. If there's a security breach, it can affect all of the resources the central institution is in charge of, so things can be catastrophic, including not only damage to internal servers but theft of funds.

That's why BitShares has a decentralized exchange. Not only does it remove the worry over one security breach compromising multiple resources, but it provides some other benefits. One of these is the prevention of high-frequency trading, putting all people at the same level of competition. It's so powerful, OpenLedger (another blockchain platform) is based on it.

In addition, the fees are lower and no trade limits.

Consensus and Governance

BitShares uses delegated proof-of-stake which not only keeps the system running, but gives users some power.

Many blockchains use proof-of-work algorithms, which are power-intensive and require expensive setups. Proof of stake, on the other hand, only requires users to “stake” their coins in order to create a new block and get rewarded. Delegated proof of stake goes even further: people “delegate” their coins to Witnesses, users who use their systems as nodes and do all the work of processing transactions and keeping the blockchain maintained, keeping the BitShares network working without requiring a central data processing center. Witnesses get rewarded with BTS by doing the work.

These Witnesses can be “voted on” by those who possess BTS tokens, and can be voted out if they don't perform well.

The Risks

As you can see, there are lots of advantages to the BitShares approach. But as with all things, there are some potential risks associated with it.

One is a black swan event, in which the BTS token itself loses lots of value quickly. This could cause a huge problem, since its the primary token used on the exchange (and it's supposed to back the bitAssets).

Another is the fact that, despite their attention to detail and focus on security, there could always be a security breach. Of course, the fact that the system is decentralized mitigates some of the most catastrophic possible effects of this, but there could still be some damage done.

BitShares vs Ripple

These are similar projects, but they have some important differences. Both are blockchain projects that support scalability and liquidity in exchanging currencies. BitShares is a decentralized exchange and platform for trading in equity, while Ripple is a cryptocurrency that's mainly intended to be used for providing a liquid go-between when exchanging currencies – it doesn't have its own exchange. BitShares is decentralized, while Ripple is more centralized. Both projects have their own wallets for conveniently storing their native coins.

BitShares vs Bitcoin

These are very different platforms altogether. While both are cryptocurrencies, BitShares is primarily a network that allows people to invest in coins that represent real-life resources like gold, dollars, or oil, as well as the ability to trade in cryptocurrencies. Bitcoin is a cryptocurrency that can be used to send payments or purchase things at specific retailers. BitShares uses a delegated proof-of-stake algorithm for its consensus and blockchain maintenance, while Bitcoin uses proof of work, an algorithm that requires large amount of energy and dedicated “miners.”

BitShares vs Ethereum

These are also very different platforms. While BitShares is a decentralized exchange, allowing for investing in cryptocurrency and things like gold and silver, Ethereum is a blockchain network that is meant to be used to create decentralized apps, distributed autonomous organizations, and as a way to send and receive payments. BitShares uses delegated proof of stake, while Ethereum uses a proof-of-work algorithm (although it will eventually be moving to a proof-of-stake algorithm). BitShares is still under construction, while Ethereum is a fully-functioning (though constantly updated) platform.

Frequently Asked Questions

Is BitShares an exchange?Yes.

Is there a BitShares wiki?
No, to our knowledge there isn't a dedicated wiki.

Where can I read news about BitShares?
Twitter, Reddit, and Medium, most likely.

Is there a BitShares wallet?
Yes, you can download it from their website.

Where can I read a review of BitShares?
On Medium and Reddit.

Is the BitShares on Reddit?
Yes, there's a community discussing it there.

What's the connection between BitShares and OpenLedger?
OpenLedger is a decentralized ledger and exchange that's based on the BitShares platform.

What's the price of BitShares?
$0.164, last we checked.

Do you know where to buy BitShares?
You can buy it on BitShares, Binance, Gate.io, and Poloniex, among many others.

What's the prediction for the price of BitShares?
Depends on how it performs in 2019, and how many people adopt it.

What is BitShares?It's a decentralized exchange that allows you to redeem native tokens for “smart coins” connected to the value of real commodities like gold or silver.

What's my BitShares wallet address?
It's your username.

Is BitShares a “DEX”?Yes, since “DEX” means “decentralized exchange.”

Does BitShares have a paper wallet?Yes, you can generate them.

What is the best BitShares wallet?It seems like the browser wallet is the best choice.

Conclusion

By offering a stable, decentralized alternative to other exchanges, BitShares seems to be on the right track. With more security, lower fees, and a system of governance that gives users some say in how the network runs, it's an appealing choice for those who are disenchanted with centralized exchanges that come with high fees, and blockchains that require proof-of-work algorithms that burn through energy (and money) and center the mining power in the hands of a rich, dedicated few.

With a potential 100,000 transactions a second and several projects already sponsored, BitShares is a promising new exchange that could change the game for everyone.

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